I think David Dayen has consistently offered the best coverage and analysis of the campaign to get the FHFA to change policy to allow for GSEs to pursue principle reduction, be that by Ed DeMarco making a change on his own or him getting fired and replaced by someone who will. No one really disagrees with the idea that the GSEs should be reducing principal to help underwater borrowers. The questions have been about the extent to which DeMarco is the biggest obstacle to fixing housing policy (he is not) and whether there are other things the GSEs can be doing besides principal reduction to aid homeowners (there are). Dayen’s post yesterday on DeMarco and his critics and the shortcomings of both sides’ arguments is a great summation of where things are at this point in the debate. I think Dayen’s closing paragraph gets at what has driven some of the skepticism against the campaign by liberal groups around DeMarco:

Needless to say, there are about a hundred things housing policy advocates could be following rather than Ed DeMarco’s come to Jesus moment. Ultimately he’s going to deliver some kind of narrow, modified principal reduction program that won’t come close to fixing housing. And then what?

Dean Baker has estimated that GSEs pursuing principle reduction would probably save 200,000-300,000 homes from foreclosure a year. While this is better than nothing, it isn’t a game changer. And DeMarco estimates the size of universe of people that he would allow principal reduction to be a tiny fraction of the entire GSE portfolio.

There needs to be a much larger conversation going on, with much larger demands.